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Right-Wing Support for LVT

When the Labour Party included a paragraph in its manifesto for the UK’s 2017 election stating that it would “initiate a review into reforming council tax and business rates and consider new options such as a land value tax”, the mere suggestion of a land value tax (LVT) was unsurprisingly derided by Conservatives and the right-wing press as “Marxist” ideology. Of course, this is nonsense, as Chris Game explains in his article “Land Value (or Garden) Tax – more Adam Smith than Marx”.

Some of my fellow LVT advocates have suggested to me that one of our most important tasks is to convince people on the right of the benefits of land value taxation – no easy task given the way the idea is frequently attacked and distorted by the right-wing press and conservative politicians.

However, there are several politicians, economists, journalists and think tanks on the conservative and libertarian right who have supported the idea. I thought it might be handy to put together a collection of articles, along with extracts, and videos supporting LVT from a right-wing perspective that can be shown to sceptics on the right, as well as perhaps to give us an insight into the arguments that may be useful in furthering our cause.

I’ve focused on people on the right who happen to be LVT supporters here, rather than LVT supporters who happen to be right-wing. I’ve also chosen to stick to more modern times, rather than go back to the days of Adam Smith (although Smith’s views are included in the article on Geo-libertarianism). A couple of the sources do not exactly provide ringing endorsements for full taxation of all land, but do at least accept some aspects of LVT. If anyone spots something that I’ve missed then please let me know. Links to all sources provided.

 

Nick Boles (Conservative MP, 2010-)

It sounds bonkers but we should embrace a land tax

“In current circumstances, one of the most pernicious taxes is national insurance as it punishes employers for taking on new people and, because we have a fairly free market in labour, reduces people’s take-home pay just as surely, though a little more indirectly, than income tax. But if we want to cut this tax on jobs and wages, we need an alternative source of revenue that is reasonably easy to collect and which is less damaging in its effects on people’s incentives to invest, expand and hire new people…

[A land value tax] would deter speculative land banks and would encourage property owners to develop brownfield sites and put rundown areas of inner cities back to good use. Over the longer term, it would lower the price of development land and help us get off that quintessentially British rollercoaster of house price booms and busts…

Using the proceeds of a targeted Land Value Tax to cut the national insurance tax on jobs might give the British economy the crucial leg-up it needs.”

David Curry (Conservative MP, 1987 – 2010)

The much bolder option

“What puzzles me is why, if he really wants a radically energised planning system and is prepared to have a huge fight to get one, Mr Brown has not gone for the much bolder option – a tax on the value of the site itself. This tax would take the form of an annual charge on the value of a site, levied according to its status in the local plan, whether or not it was developed. Its advocates claim that it would bring idle land into the best use for it, leading to an increase in supply and a decline in price.

Rather than capturing planning gain on one site at one moment, a land value tax would also recover value from neighbouring sites that had benefited from the development. Local authorities would collect more tax by the mere act of designating (or zoning) suitable land for industrial or residential development, thereby increasing its value even if no development took place. Landowners would have no incentive to hold sites back from development. Councils, by contrast, would have an incentive actively to pursue re-zoning.”

Conservatives for Liberty

Libertarian solutions to the housing crisis

“One of these policies could be the replacement of council tax and stamp duty land tax (SDLT) with a new and simpler land value tax (LVT) on the unimproved value of all UK land. As derelict land in close proximity to urban infrastructure such as roads and railways is more valuable than Greenfield land with little nearby infrastructure, the redevelopment of poorly-utilised inner city land by its owners over new Greenfield sites would be encouraged by the LVT.

Consequently, the LVT would significantly assist in the prevention of undesired urban sprawl and the preservation of rural settings; making its introduction an effective replacement to green belts.

The elimination of SDLT would help to stimulate the UK property market; something that will need to occur if we are to encourage more housing development in the UK. Another added bonus is that the LVT would be very difficult to evade. This is because British land cannot be physically moved beyond the jurisdiction of UK tax authorities.”

Samuel Brittan (Thatcherite journalist)

Tax England’s green and pleasant land

“Yet, far from being an outrageous Bolshevik idea, the case for a land tax is one of the oldest and least disputed propositions in economic thought…

The basic point is that the supply of land, with rare exceptions such as reclamation in the Netherlands, is fixed. But because of its scarcity owners can command an income over and above the normal return to the enterprises placed upon it.”

David Cowan (Conservative activist, Tory Reform Group)

Progressive Conservatives should support a Land Value Tax

“The introduction of a LVT ought to be viewed as the most legitimate way to raise new revenue.

For too long, landowners and speculators have been able to reap sizeable economic outputs from rising land values, though contributing little economic input. One example being how the construction of the Jubilee line sent surrounding land values shooting up to £10 billion, to the benefit of landowners, while taxpayers still had to foot the bill….

Properties of all shapes and sizes are already overtaxed by the likes of council tax, business rates, stamp duty land tax, planning charges, and landfill tax. If these taxes were to remain then LVT would be burdening people with further unwelcome costs.

Instead, LVT should replace those property taxes – either entirely or at the very least mostly…

The LVT would not harm enterprise. It would boost productivity, discourage urban sprawl, could replace the plethora of punitive property taxes, and would be relatively simple to administer and collect.”

Adam Smith Institute (ASI)

PRO-GROWTH TAX REFORM

“Reform business rates and council tax into a pure Land Value Tax on unimproved land values so that capital investment is not taxed.”

UK Budget predictions 2016: What do free marketeers want from chancellor George Osborne?

“The ASI wants business rates to be stopped from taxing capital. Its reasoning is as follows: business rates tax property values, so they effectively tax both the land a property is built on, and what sits on top of the land (bricks, mortar, machinery).

“Taxing land values is a relatively good way of raising revenue, because it does not discourage production. But taxing property discourages construction, improvements and investments in new machinery,” it says.”

Ben Southwood (ASI)

THE ASI AND HOUSING IN 2017

Tax unimproved land values, not transactions. Stamp duty land tax destroys huge amounts of economic value and prevents allocative efficiency—it should be abolished. Council tax and business rates disincentivise improvement and bias buildings toward certain uses—they should be first merged, and then levied only on unimproved values.”

Sam Bowman (ASI)

Sam Bowman discusses the devolution of business rates on BBC 5 Live

“If and when they do revalue business rates, there’s a disincentive to anybody who is a business or is a land owner to improve the property that they’re on, and we don’t want that. What we want is them to only be paying the value of the land, and to try and get as much as possible from that land, by building as much on that property or the most profitable thing they possibly can. We’d get that with a land value tax, we don’t really get that really from business rates.”

BUSINESS RATES: NOT SUCH A GOOD TAX AFTER ALL

“A good rule of thumb is that if you tax something, you get less of it, which is why taxes on capital are such a bad idea. But since there’s a fixed supply of land, taxing the value of land doesn’t get you less of anything. Nice one.”

WHY EVERYBODY IS WRONG ABOUT THE LAND VALUE TAX (EXCEPT ME)

“It’s a bit silly to call this a ‘garden tax’, since council tax valuations already include gardens. Unless the Tories are proposing to exempt gardens when we calculate how much a property is worth, they too favour a ‘garden tax’.”

Tim Worstall (ASI, Forbes)

Land Value Tax is a great idea – but it’ll never happen

“One reason to like this tax – as Milton Friedman pointed out – is that it’s the least distortionary tax there is. No one is making land anymore, so we’re not going to reduce the supply of it by taxing it. That is true of everything else – tax apple consumption and people eat fewer apples, tax incomes and some work less, tax profits and people set up fewer businesses. But land is in fixed supply, so we’re not getting less as a result of gaining our necessary tax revenue from it…

It’s also right that everyone should pay it. Yea even those horny handed sons of the soil, the farmers. Land that’s on top of some Dale is worth spit and so would pay near nothing, someone using Surrey to grow turnips probably should be encouraged to make better use of it.

For, yes, having to pay tax on the value of the land does indeed mean that people will have to allocate the land to a use which will producing a decent return on that value. This is why the OECD has insisted that “repeated taxation on property”, by which they mean the LVT, makes the economy more efficient, unlike all other taxes.”

There are good taxes and bad taxes

“How much economic activity doesn’t take place because of the imposition of different types of taxes?

Repeated taxes on property, that is business rates, have the lowest deadweight costs of any form of tax. The only one that could be better is a proper land value tax.”

AN INTERESTING AND CORRECT WAY TO DO HOUSING TAXATION

“As Henry George pointed out to us all the art of land value taxation is to tax the unimproved value of said land. Another way to say the same thing is that we’re trying to tax the value that society adds to the land, not what the owner has added themselves. Land in the centre of London has a higher value than much land elsewhere just because it is surrounded by London. It seems reasonable enough that some of that value created by London should be taxed to pay for London.”

NO, NO, THEY’RE QUITE RIGHT HERE WE REALLY MUST CHANGE BUSINESS RATES

“That is, business rates are a crude proxy for a land value tax and as a crude proxy they’re not quite good enough. What we want instead is a proper land value tax, one that taxes the undeveloped value of that specific plot of land, that value being determined by all the other development that has taken place around it. What is actually developed upon that plot should not be taxed in the slightest. In that manner the retailer, the occupier, will not be bearing any of the cost of the rates, the developer will not be yet the landlord of the land itself will be carrying the full burden.”

Contra Piketty It’s Not A Wealth Tax We Need But A Land Value Tax

“For a reasonable analysis of how zoning (or in the UK, planning permission) works is that those who currently own houses in desirable, low population areas, vote to get the zoning policies which keep those areas low population at no financial cost to themselves. The point of land value taxation being to insist that they carry that cost of excluding others from building houses in such desirable areas.”

Sadly, all too many don’t understand business rates

“Business rates are not perfect as they rely upon the rentable value of the building, not the land it is upon. But they are the closest we’ve got to a good tax, a land value tax…

If you happen to be trading in a property hot spot (and, indeed, your brilliant business may have contributed to the success of that place, as in Southwold and Port Isaac, areas with notably good independent shops that will be hit by rate hikes), or big brands have arrived and now surround your enterprise, then your valuation goes up and you find yourself catapulted out of the small business relief zone.

Yes, that’s the point. There’s a limited supply of land in those hot spots, taxing that land is the least distortionary tax that we have. It’s a good tax. And note what is being taxed – that the other people around that property are adding value to it.

But the revaluation works for the online retail giants. According to CVS analysis, the nine Amazon distribution centres in England and Wales will be able to knock £148,000 off their property tax liabilities this year (despite annual sales in excess of £6bn). Similarly, fashion retailer Boohoo gets 13% knocked off the bill for its distribution centre in Burnley; so it goes on.

Quite so, this is what we want to happen. There’s a limited demand for chi chi shopfronts in Burnley and there’s lots of land. Thus we tax the use of low value land more lightly than the use of high value land.”

Why We Want Dynamic Scoring Of Budgets; It Would Bring Us A Land Value Tax

“However, we also know that different taxes have different deadweight costs… We even know a rough order of ranking of those deadweight costs. Transactions taxes have vast deadweight costs: at least one official report on the financial transactions tax (the report from the EU itself) tells us that that tax would make the whole economy so much smaller that it would actually lose tax revenue by being levied. Lower than that are wealth taxes (a once off wealth tax that no one knows is coming does not, but a regular one does), then capital and corporation taxes, then income taxes, then with still lower deadweight costs consumption taxes (like a VAT or sales tax) and then finally, at the bottom, we find that repeated taxes on non-movable property can even have positive deadweights. And that last can also be called a land value tax.”

Institute of Economic Affairs (IEA)

UK Budget predictions 2016: What do free marketeers want from chancellor George Osborne?

“For the Institute of Economic Affairs (IEA), this is the solution: Property taxation should be completely overhauled, with the long-term aim of abolishing council tax, business rates and stamp duty, and replacing them with a Land Value Tax on commercial land and a tax on imputed rent for residential property.”

Taxation, Government Spending and Economic Growth.

“If properly constituted, a tax on location value may cause disproportionately little economic damage, because land cannot be hidden or taken overseas to avoid the tax and owners cannot respond to the tax by producing less value in its location”

“The move away from existing property taxes and towards a land value tax and a tax on the imputed rent from owner-occupied housing (or a housing consumption tax) would create a tax sys­tem much more conducive to growth. Existing taxes on business property would be abolished and homeowners would no longer suffer stamp duty when they moved to take a more productive job. The tax on imputed rent would end the bias against rented property that exists in the UK tax system and a land value tax is well understood by economists to be one of the least growth-inhibiting taxes available.”

The case for a Land Value Tax

“The tax has attracted many proponents because it is as close as possible to an ideal tax – it is efficient (does not alter economic activity), equitable (the richer tend to have more land than the poor) and has revenue raising potential (the tax is difficult to avoid or evade). It also recognises land as a precious finite resource. More importantly, if implemented properly it can potentially seed economic growth, lead to greater productivity and even energise house building (as well as helping stabilise the cycle in land prices).”

Kristian Niemietz (IEA)

Autumn Statement: splashing central government money around is not ‘devolution’

“Now imagine local authorities had to finance all of their expenditure from their own tax revenue, and imagine a large chunk of that revenue came from, say, a local Land Value Tax (LVT). They would then have a strong incentive to grant planning permission more liberally, because this would be an easy way to broaden their tax base. That is the way to solve the housing crisis – not subsidising developers, and not subsidising homeownership.”

To solve the housing crisis, we must take on NIMBYs and abolish the green belt

“Sensible tax changes would strengthen incentives to permit development by giving local authorities ‘skin in the game’. This could be achieved by, for example, replacing council tax, stamp duty, business rates and (property-related) capital gains taxes with a local Land Value Tax (LVT). Local authorities would retain 100 per cent of LVT revenue. This would encourage tax competition for residents, and it would allow local authorities to capture a part of the ‘planning gain’ (the increase in land value when planning permission is granted).”

Julian Jessop (IEA)

Why a land value tax would get Britain building

“The economic principles of a land value tax have been advocated for centuries, from the writings of Adam Smith and Milton Freedman to the Mirrlees Review. In its purest form, an LVT is a tax on the value of the underlying land, independently of any specific improvements such as the value of any property built on it. Crucially, the owner must pay even if the land is currently unused. Unlike most taxes, then, an LVT actually encourages economic activity.”

As UK land value hits 5 trillion pounds, calls for new tax rise

“As the stock of land is fixed and housing is in short supply, continued growth in land value is not surprising, said Julian Jessop, chief economist at the Institute of Economic Affairs, a free-market think tank…

“The longer that this goes on, the stronger the case for introducing a land value tax to make sure that this scarce resource is used efficiently and fairly,” Jessop said.”

Conservative Home

Andrew Lilico: Is it possible privately to own land?

“Likewise, the question of the private ownership of land is not one of whether private persons can possess or control or even trade claims on the use of land.  The question is whether I can truly own land the way that I can truly own a spear.

I say: No.  But what I mean by that is quite narrow, as with the airspace.  You can own buildings – because buildings are created with labour and other non-land property… But you cannot (normally?) own the space (the “land”) in which the buildings and the soil sit because, as with the airspace, no property or labour has contributed to its creation…

In a previous piece, I argued against wealth taxes.  But the reasoning of this post suggests that land taxes are not wealth taxes, for land cannot be part of a private citizen’s property.  The land is owned (if by anyone) by the Crown.  So the Crown might legitimately charge a fee for its use.  I do not think such a charge should even be described as a “tax”.  It is more like a usage fee.”

How and why should we tax land?

“In theory, the cost of paying the tax wouldn’t be passed on to tenants, but it would capture the “‘undeserved’ gains landowners make on the investment of others, such as the government improving nearby transport links.”

One could also argue that it would be an excellent way of discouraging the excesses of the British property market.”

Ideas for the Budget 1) Peter Franklin: Wanted. A Marshall Plan for housing’s excluded generation.

“Meanwhile, the Chancellor should announce a comprehensive review of land taxation. Rents extracted from the productive economy by property speculators and land monopolists are a drag on growth not a contributor to it. They should be taxed accordingly.”

Milton Friedman

Milton Friedman talks about property taxes

“There’s a sense in which all taxes are antagonistic to free enterprise – and yet we need taxes… So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument from many, many years ago.”

Milton Friedman, Land value tax and internet currencies

“Governments can collect taxes best on things that don’t move. Land is an ideal basis for taxation because you can’t take it away.”

David Nolan (founder of the Libertarian Party)

LVT advocates

“What kind of taxation is least harmful?….My own preference is for a single tax on land, with landholders doing their own valuation; you’d state the price at which you’d be willing to sell your land, and pay taxes on that amount. Anyone (including the tax collector) who wanted to buy it at that price could do so. This is simple, fair, and minimizes government snooping into our lives and business.”

Various Libertarian sites

Why Libertarians Should Support Land Value Taxation

English Common Law is based on natural relations within society, and not arbitrary decrees and statutes, and so it can be seen that the right to assess landed property for a land-related payment is merely a recognition in our law that land ownership cannot be absolute, that land anywhere in the world existed before any human society was formed, that the land that we live on forms a common social resource, and so it not genuinely “ownable” by anyone in any country, society or time period…

The original land grants made to Norman nobles could only be made in the context of English Common Law, which provided for exactions to be made by the Crown. It is clear that a common social resource—the land—a resource that naturally exists, is not the product of investment or the application of human skill and is generally not something that more can be produced of—has become monopolised by a few…

It is right therefore that the state attempt to extract as large a proportion as possible of the economic rent derived from possession of land, minerals, forestry and fishery resources, and the electromagnetic spectrum, and land taxation should be seen in this light. Given the fact that land is a common social resource, it is doubtful whether the word “taxation” is correctly applied to a land levy. What we are talking about here is not taxation of income or profits or the restriction of economic activity, but a levy that is based on the fact that no original ownership of the common resources ever existed.”

What is Geo-libertarianism?

“The term “geo-libertarianism” was coined by economist Fred E. Foldvary. The “geo” in “geo-libertarian” stands for Georgist. Georgism is the economic belief that people should keep what they work for, but the benefits of land ownership should belong to the community as a whole. Thus, they support a land value tax (or LVT for short). Straight away, you probably see that this view is at odds with the common libertarian idea of property being an extension of the individual. Georgism stresses the idea of community, and libertarianism stresses individualism. However, these views don’t necessarily to contradict each other if the community exists to protect the rights of the individual…

One of the first Americans to identify as a libertarian was also a Georgist. His name was Albert Jay Nock. Milton Friedman also referred to the land value tax as the “least bad tax.” David Nolan (the founder of the Libertarian Party and the creator of the Nolan chart) claimed that a single tax on land was the “least harmful” kind of taxation.”

A Tax Even Libertarians Could Love?

“The moral argument starts from the same place as John Locke’s famous discussion of property, with the claim that each individual is the sole rightful owner of his body and labor. Because George accepted Locke’s idea of self-ownership, he argued that most forms of taxation are unjust – essentially a form of theft. If you own your labor, and you choose to sell your labor to somebody else, no third party – including government – can legitimately demand that you give them a portion of the income you’ve received. To do so would be, in effect, to steal your labor.

But natural resources are not the product of anyone’s labor. They simply exist, on their own, as a free gift of nature. And because nobody created them, nobody has any better claim on the raw value of those resources than anybody else…

Natural resources, George thought, belong to humanity as a whole, and not to any particular person. A tax on the unimproved value of those resources is therefore one way in which humanity as a whole can reclaim what has been unjustly monopolized by a few, and do so moreover without violating individuals’ self-ownership.”

William F. Buckley Jr (conservative author and commentator)

 

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Mentions of LVT in GE2017 manifestos

Conservatives

Unsurprisingly, there is no mention of LVT in the Conservative manifesto.

However, there is a commitment to “work with private and public sector house builders to capture the increase in land value created when they build to reinvest in local infrastructure, essential services and further housing, making it both easier and more certain that public sector landowners, and communities themselves, benefit from the increase in land value from urban regeneration and development.”

Labour

“A Labour government will give local government extra funding next year. We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term.”

Lib Dems

“Reviewing the Business Rates system, prioritising reforms that recognise the development of the digital economy, lessening the burden on smaller businesses, and ensuring high streets remain competitive. We will also consider the implementation of Land Value Taxation.”

Green Party

“Action on empty homes to bring them back into use and a trial of a Land Value Tax to encourage the use of vacant land and reduce speculation.”

Scottish Labour

“We would scrap the council tax, and allow local authorities to use new options, such as a tourist tax and land value tax, to ensure local government has sustainable funding for the long term.”

Scottish Green Party

“Tackling wealth inequality will be a priority. We will introduce a wealth tax on the wealthiest 1%, continue support for a Land Value Tax and introduce laws to limit the size of CEO pay relative to the lowest-paid workers in the company.”

Plaid Cymru, UKIP, Scottish Conservatives, SNP, Scottish Lib Dems

No mention of LVT.

 

Who are the Deobandis?

While researching for one of my previous blog posts titled “The Issue of Foreign-Funded Mosques in Europe”, I came across an article by Innes Bowen that posed the question “So which Islamic schools of thought run Britain’s mosques today?” Bowen’s response countered some of the assumptions about the influence of Saudi Arabia that I had had up until that point. “The influence of Saudi Arabia’s Wahhabi movement is often cited” she writes. “But the Wahhabis — or Salafis as they prefer to be called — control just 6 per cent of mosques”.

Instead of focusing on Saudi Arabia, Bowen’s article puts the spotlight on the Deobandis, a sub-sect of Sunni Islam that controls more than 600 of Britain’s 1350 mosques. One sentence that particularly caught my eye – and that was particularly relevant to my blog post – was the concluding line of the article: “It is, perhaps, time to stop blaming foreigners. Illiberal Islam is thoroughly British these days.” Until reading Bowen’s article I had never even heard of the Deobandis so I thought it might be interesting to research them and write a blog post about my findings.

The Deobandi school of thought first arose in colonial-era India as a revivalist movement against the British and as a reaction against the perceived corruption of Islam caused by the British occupation. In 1857 a mutiny against the British was crushed and, according to one article I read, “Muslims in British India were the primary targets during the ensuing British crackdown because the revolt was fought under the leadership of the Muslim Mughal emperor”. This resulted in the migration of Muslim clerics to various places in an effort to “preserve their religious life and culture”.

One particular place that attracted several clerics was the town of Deoband in Uttar Pradesh in northern India. These clerics established the Darul Uloom seminary (or madrassa) in Deoband in 1866. By 1967, the school was producing 3,191 graduates and today has over 100,000 students. The Deobandi movement began to spread as scholars migrated to Pakistan following the separation of India in 1947.

jameah_darul_uloom_deoband

The Darul Uloom Deoband in India

Photo credit: By Bakrbinaziz (Own work) [ CC BY 3.0 (http://creativecommons.org/licenses/by/3.0) ], via Wikimedia Commons

Eventually, the movement found its way to the UK when migrants from India and Pakistan were encouraged to move to Britain to provide labour in the post-war recovery. In just five years between 1961 and 1966, the Pakistani community in England grew from around 25,000 to 120,000. According to a report on the Pakistani Community in England, there was no “automatic loyalty” to the various Islamic movements that arrived in the UK along with these migrants, and a fierce rivalry between Deobandi movements, such as Tablighi Jamaat, and the Pakastani Sufis (known as Barelvis) ensued for the control of mosques. The Deobandis focused their efforts on building educational institutions, which has led to the current situation where 80 percent of British-trained imams are Deobandi.

The first Deobandi school in England was the Darul Uloom Al-Arabiyyah Al-Islamiyyah, established on the outskirts of Manchester in Bury in 1975. Other institutions such as Jameah Uloomul Quran in Leicester and Jami’at Ta’lim al-Islam followed in 1977 and 1981 respectively. More recently, there has been controversy about plans to construct a £100 million “mega-mosque” in East London, which were eventually rejected in 2015.

Deobandis in Britain are often accused of not being willing to integrate into society and of not conforming to British values. Sometimes the accusations go further and suggest that Deobandi mosques are radicalising British Muslims.

While researching the Deobandis in Britain, I soon found myself reading about numerous controversies surrounding the sect. For example, in 2007 a Deobandi school in the northern town of Dewsbury was revealed to be under investigation for “promoting an extreme form of Islam”. The school was accused of exposing children to anti-Jewish propaganda and teaching students “not to adopt British customs”, watch television, or participate in mixed-gender activities. Most worryingly of all, material distributed by the school encouraged Muslims “to ‘expend… even life’ for ‘Allah’s just order’”.

I also found stories linking Deobandi clerics to the distribution of extremist literature in British prisons and threatening behaviour towards other sects and anyone who opposes them. For example, according to the BBC, a Deobandi Muslim from the Midlands “had been threatened with excommunication and violence for raising concerns about, among other issues, the propagation of sectarian hatred”.

A particularly useful source of information was a two-part BBC radio programme about the Deobandis that was broadcast in April of this year. In the programme, academic Phillip Lewis described the “Deobandi villages” that can be found within northern English cities. He talked of a “closed world to non-Muslims”, adding that these Deobandi enclaves are also ”often a closed world to other Muslims who aren’t Deobandis”.

The programme revealed how Masood Azhar, now the leader of a violent Islamist group in Pakistan and wanted by the Indian authorities for a terrorist attack carried out on a military base, had been welcomed with open arms at numerous Deobandi institutions in the UK in 1993. He toured the UK, visiting over 40 mosques to preach about jihad. He is reported to have told young people that they “should prepare for jihad without any delay. They should get jihadist training from wherever they can”. He is accused by Innes Bowen of being the “first to spread the seeds of modern jihadist militancy in Britain” and providing training camp facilities and logistical support to British Muslims to carry out terrorist attacks in the UK.

Also mentioned in the programme, was Aimen Dean, a former member of al-Qaeda, who had switched allegiance and was subsequently recruited by MI5. In his role as an informant, he pretended that he was still with al-Qaeda and discovered that “even after 9/11 many mosques were still stubborn in their support of the Taliban because of the Deobandi solidarity”.

The programme received a considerable backlash from British Deobandis. One blogger points out that many Deobandis actually do promote British values. He highlights the fact that the largest Deobandi school in the UK has been rated “outstanding” by Ofsted inspectors and praised for promoting “fundamental British values, such as democracy, rule of law, individual liberty and mutual respect and tolerance for those of different faiths and beliefs”.

Another blogger argues that the label “Deobandi” is basically meaningless: “I guarantee you, had the reporter bothered to go to a ‘Deobandi’ mosque and asked a worshipper – “Are you a Deobandi?”  The response would probably have been, “No – I am a Surti” or “Bharuchi”. The majority of the stated 600,000 so-called ‘Deobandis’ in the UK do not even know that they would be classified as ‘Deobandis’.”

As I continued digging deeper into this subject, it became increasingly clear that the Deobandis are far from a homogenous group. For example, although the Taliban is considered to be a Deobandi offshoot, the original seminary in India issued a fatwa against terrorism, with rector Habibur Rehman stating that “Islam rejects all kinds of unjust violence, breach of peace, bloodshed, murder and plunder and does not allow it in any form”.

Something that is often overlooked in some of the more scare-mongering articles that I read is the influence that the Wahhabi/Salafist ideology has had on the Deobandi movement.

It’s no secret that Saudi Arabia has spent billions of dollars to spread Wahhabism around the world, in particular in the area along the border between Pakistan and Afghanistan. It is the “Saudi-isation” of Pakistan that has given rise to the Taliban in the region.

The Saudi’s also capitalised on the fight against the Soviet Union in Afghanistan in order to spread their influence, as explained here:  

According to a World Bank report, enrollment in Deobandi seminaries increased after 1979, coinciding with the start of the Afghan jihad against the Soviets. Pashtuns played a major role in the Afghan jihad, and a large number of these fighters were drawn from Deobandi seminaries. In addition to American and Saudi money helping to support the war against the Soviets in Afghanistan, Saudi Arabia infused Deobandi seminaries with Wahhabi ideology. The Saudis targeted Deobandi Islam because it was the most popular Islamic school in the Pashtun belt.”

Backed by Saudi money, it is this Wahhabi-infused form of Deobandi Islam that has been gaining strength around the world in recent decades, including in Britain. In the UK, this is demonstrated by the fact that some of the extremist material discovered in British prisons mentioned above was printed in Saudi Arabia.

So is illiberal Islam “thoroughly British these days” as Innes Bowen claims? Well, there are clearly issues concerning conservative Islamic beliefs and integration in Britain that need to be dealt with, including within the Deobandi community. However, the Wahhabi ideology being propagated by Saudi Arabia – not Deobandism – is what leads to radicalisation and is the real threat to the world. It is when Deobandism becomes infected with Wahhabism that it becomes truly dangerous, as has been the case with the Taliban.

With the rise of radical groups and terrorist attacks occurring on European soil, we seem desperate to pin the blame for all the problems on a particular group, and the Deobandis make for an easy scapegoat. Maybe I’m guilty of doing the same with the Saudis, but the more I read the more I can’t help seeing the grubby marks left behind everywhere by sticky Wahhabi fingers.

Basic Income vs Job Guarantee: A Few Thoughts

Since I began following the discussion about basic income a couple of years ago, I’ve seen a number of people arguing that a job guarantee is a better solution to alleviate poverty. Briefly, a job guarantee is where the government acts as “employer of last resort”, providing jobs when the private sector is unable to. I’ve read several articles about the concept, but have always had a few reservations about it and felt that some of the criticisms of basic income made by its supporters have been somewhat unfair.

For example, in August Pavlina Tcherneva, a prominent supporter of the job guarantee, made an appearance on RT’s Boom Bust programme (see video below). One of her main criticisms of basic income is that it doesn’t do enough to stabilise the business cycle. “The basic income doesn’t have this counter-cyclical stabilisation function” she says. “It is supposed to be provided at all times irrespective of the macro-economic conditions. Every fiscal policy has a counter-cyclical feature except the basic income guarantee”.

So far, this doesn’t seem to have been an issue with the Alaskan dividend – the nearest example to a basic income that we have – which has been providing every Alaskan with an annual, unconditional cash payment since 1982. Funding a basic income like this by means of a sovereign wealth fund is the method preferred by Guy Standing, co-founder of the Basic Income Earth Network. He has refuted the “business cycle” argument, saying that basic income payments made in this way can be increased and decreased depending on the state of the economy with an independent body making judgements on the amount being paid out.

However, if –unlike the Alaskan dividend – a basic income is used to replace existing elements of the welfare state, in particular unemployment benefits and tax credits, then Tcherneva’s criticism may be a legitimate concern.

Many basic income models already have a counter-cyclical feature built into them though. This usually involves an integration of the benefits and tax systems. For instance, several proposals for a basic income in the UK include the abolishment of the personal tax allowance. This means that, unlike now, all income would be liable for taxation. As soon as someone’s income rises they would begin to pay back more of their basic income through income tax. Additional marginal tax rates can be implemented to ensure that more of the basic income is clawed back from higher earners.

In this way, a counter cyclical feature is ensured: when the economy is doing well more people will be paying back their basic income, and when it’s not doing so well people will rely more on the basic income, just as they do with welfare now. Alternatively, a land value tax could be introduced to recoup some of the money from wealthy individuals. It is often argued that a land value tax would stabilise the economic cycle of boom and bust.

Clawing back the basic income in one of these ways also tackles another common criticism of basic income, namely that it isn’t targeted enough to people on low incomes. If the basic income is recouped from the rich, more money would be available to raise the level of the basic income and ensure that people on low incomes are better off.

I’m not against the idea of a job guarantee in combination with a basic income though. “Providing a financial incentive to seek work may not be enough, if job-hunting is difficult and expensive” writes basic income advocate Frances Coppola in Forbes. “People may need help looking for jobs, and in some areas may need the government to guarantee a job… The combination of job guarantee scheme with basic income should ensure that anyone who wants to work can do so.”

If there is work to be done that won’t be taken care of by the market then why not have the government employ people in certain areas of the economy? If we look at the United States for example, there is clearly a need to deal with the country’s crumbling infrastructure. A jobs programme to fix this, like the one proposed by Bernie Sanders in his presidential campaign, would be a good idea.

L. Randall Wray, a professor of Economics at the University of Missouri–Kansas City and colleague of Pavlina Tcherneva, provides a list of other possible jobs that could be guaranteed by the government, such as companion for senior citizens, the bed-ridden, mentally or physically disabled, public school classroom assistant, neighbourhood clean-up worker, library assistant, environmental safety monitor, etc. These would be useful jobs that wouldn’t necessarily be filled by the private sector so I see no problem with a job guarantee providing this work.

A worthy goal that advocates of both the job guarantee and basic income have in common is the aim of redefining what is meant by “work”, allowing people to choose to do useful work that is not usually considered “productive”. However, if a government were to implement a job guarantee with the objective of simply achieving full employment, no matter what sort of jobs are being done, then I probably wouldn’t be in favour of it. This would continue the fetishizing of jobs and lead to more people being employed in what David Graeber describes as “bullshit jobs”. The main issue is see really is whether there is enough useful work to do for the government to guarantee everyone a job.

There is also plenty of work, such as care work, already being done that isn’t always remunerated and wouldn’t necessarily make sense being part of a job guarantee programme. According to Emily Holzhausen, Director of Policy at Carers UK, 1.4 million people in the UK each provide over 50 hours of unpaid care per week. A basic income seems like the simpler way to recognise this unpaid contribution and make it easier for people to take on and possibly share the responsibility of care work without involving state bureaucracy. If there are important jobs that need to be done within a community, does the government really need to get involved to provide formal jobs? We could instead just provide a basic income and let people decide what work needs to be done on their own.

An issue that I have with implementing a job guarantee without a basic income is that it would do nothing for people who are already employed but whose incomes fluctuate; the self-employed, freelancers working in the gig economy or workers on part-time/zero-hour contracts, for example.

In particular with the potential for giant leaps forward in terms of automation and artificial intelligence, it seems clear that we’re moving further towards an economy that creates fewer and fewer steady full-time jobs, and increasingly promotes flexible labour markets. Without a basic income we will forever be resisting this. It would surely be better to embrace new, more flexible ways of working, while also ensuring improved financial stability for workers in the form of a basic income.

Furthermore, a job guarantee doesn’t eliminate the disincentives to work caused by high marginal tax rates at the lower end of the income scale. As Scott Santens explains in a recent article, welfare effectively punishes people for working because it is withdrawn, whereas a basic income would help to remove the “benefits trap” and make sure that work always pays.

Related to this is the final criticism of basic income that I want address: the idea that basic income simply pays people to stay at home. Mariana Mazzucato (who I thought was a supporter of basic income) recently tweeted an article by L. Randall Wray to present this argument.

In the article, Wray talks about a job guarantee programme called Plan Jefes y Jefas, – or Jefes – that was introduced in Argentina following an economic crisis there in 2001-02. The scheme created around 2 million new jobs for poor heads of households.  

According to Wray, at one point three quarters of the participants were female. However, when the economy recovered and the men in the families began to find work again in the private sector, the government decided to draw down the Jefes programme and place the women back on regular welfare. When the women were asked “would you prefer to receive the benefit of the Jefes program but stay at home,” they all said that they would prefer to go out to work.

It seems odd to me that Mazzucato would see this as an argument against basic income. Surely it is rather an argument against welfare in its current form? I think this idea of basic income paying people – in particular women – to stay at home is a really unfair representation of basic income. Pilots have shown that a basic income can help people to work. For example, following a basic income trial in India, Guy Standing notes that people actually worked more, not less. One example he gives is of a disabled woman who was able to buy a sewing machine and become a seamstress. If – as job guarantee advocates seem to agree – people instinctively want to work, why would a basic income stop women from going out and participating in the community or finding a job? Unlike conventional welfare, a basic income would give them every incentive to do so.

I think this discussion about these ideas is really interesting and I intend to keep an open mind about a job guarantee. Like France Coppola, I think a job guarantee could be done alongside a basic income and I see no reason why we can’t try both.

See also Scott Santens discussing basic income and job guarantee with Iain Dooley of the Australian Employment Party:

The Issue of Foreign-Funded Mosques in Europe

This week the burkini ban that has been implemented in a few French towns has been making headlines, in particular after armed police officers made a Muslim woman remove part of her clothing on a beach in Nice. However, this is not the only policy that has been proposed recently by French authorities following a summer of jihadist terror.

On 28th July, French Prime Minister Manuel Valls stated that he was “open to the idea that – for a period yet to be determined – there should be no financing from abroad for the construction of mosques”. There are fears within the country that the influence of funding from foreign countries, such as Saudi Arabia, is radicalising French Muslims. According to the World News Journal, “between 100 and 150 new mosques are at various stages of planning and construction across France” since 2011, and “US government sources suspect that much of the funding is actually funneled from Saudi sources through difficult-to-track chains of bank accounts and person-to-person cash transfers”.

Tension has been growing around the sources of funding for mosques in France. For example, in Nice – where 84 people were killed in July by a Tunisian lorry driver – a Saudi-funded mosque finally opened this summer following a 15-year dispute. The construction of the mosque had been fiercely contested by former mayor Christian Estrosi who has accused the Saudi owner of “advocating sharia” and wanting to “destroy all of the churches on the Arabian peninsula”.

It would seem perfectly reasonable for any country to be concerned about the influence of Saudi Arabia on its Muslim population. For decades the kingdom has been spending billions of dollars in an attempt to spread its extremely conservative and intolerant ideology known as Wahhabism around the globe, resulting in the growth of extremist organisations worldwide. The strategy has included funding mosques and madrassas – particularly in Afghanistan and Pakistan – as well as providing training and textbooks.

These tactics have also been used in European countries. A major example is Kosovo. The small Balkan country of just 2 million inhabitants has seen more people per capita travel to Syria to fight for ISIS than any other European nation. Traditionally, Kosovan Muslims follow the Hanafi school of Islam, described here in the New York Times as a “liberal version that is accepting of other religions”.  However, as that article explains, in the period following the bloody Balkan civil war, the Saudis arrived offering millions of dollars in aid. This money was used to build new mosques, train Kosovan imams in Saudi Arabia and disseminate Wahhabi literature, sowing the seeds of intolerance and political Islam within the local Muslim community.

Belgium is another country that has seen parts of its previously moderate Muslim community gradually radicalised by external forces. In the 1960s, the then-king of Belgium actually gifted the land and building that currently houses the Great Mosque of Brussels to the Saudi king Faisal in return for oil contracts. The ultra-conservative Wahhabi ideology imported to Belgium from Saudi Arabia conflicts with the more tolerant version of Islam adhered to by immigrants who arrived from places like Morocco and Turkey in the 1960s and 70s. In combination with poor social conditions like those in the infamous neighbourhood of Molenbeek, the spread of Wahhabism has led to a small minority of residents being especially susceptible to radicalisation by groups like ISIS.

One European country has already banned foreign funding for the construction and running of mosques. In 2015, Austria passed its updated “law on Islam”, which the Austrian government believes should be a model for the rest of Europe. In addition to banning the external funding of mosques, the law also requires imams to speak German. However, the government attempted to strike a balance by strengthening protections for Austrian Muslims, allowing Muslims to take time off work to observe their holidays and extending other rights relating to Islamic graveyards and pastoral care in hospitals.

The Austrian law is both a reaction to the growing number of Austrian Muslims leaving to join jihadist movements abroad and an attempt to counter the influence of rivals Turkey and Saudi Arabia who have been competing to lead the Muslim community in Austria for decades.  “What we want is to reduce the political influence and control from abroad and we want to give Islam the chance to develop freely within our society and in line with our common European values” says Foreign Minister, Sebastian Kurz.

There are, however, potential problems with the Austrian ban on foreign funding. Firstly, the ban may alienate Muslims as it only applies to them and not to other religious groups. Secondly, limiting funding might mean that moderate mosques are unable to survive or have to turn to illegal sources of funding, possibly pushing them towards more radical sources of financing.

This is an issue that France will also have to deal with if it goes down this path. Being a deeply secular state, it cannot intervene to provide funding for religious institutions. To get around this, the creation of a new foundation to provide “total transparency” of funding is being discussed. The idea would be to finance French mosques with fees from the halal food sector. It seems doubtful, though, that this would be enough to cover the costs of running the country’s mosques.

One critic, Senator Nathalie Goulet, has denounced the plans to forbid foreign funding, describing the idea of the ban as “absurd and impossible”. She claims that the proposals are “based on the assumption that radicalisation takes place inside mosques, which is not true”. In her opinion, the best solution is to make funding transparent by ensuring they are transferred via a dedicated foundation.

It’s true that mosques are not the only place where radicalisation takes place. For example, France’s prisons have been described as “factories for radical Islamists”. Meanwhile, the success of radical groups recruiting online is a major concern. As a Jordanian intelligence official says, “Even if I shut down every mosque, every person who supported ISIS in Jordan, there would still be YouTube videos recruiting young men with gun fights that look like they came out of a Hollywood movie. There would still be Twitter where men tweet about how they are living in paradise with three wives and a house, and there would still be WhatsApp and Telegram and every other network for them to communicate personally with whoever they want”. Remarkably, ISIS has even used dating sites for recruitment purposes.

Without addressing these issues, as well as the underlying social and economic conditions that leave previously tolerant European Muslims susceptible to radicalisation, a ban on the foreign funding of mosques may prove an ineffective way to combat extremism. A blanket ban would eliminate funding from moderate sources and could potentially result in the further alienation of the local Muslim population if the ban is only applied to them and not to other religious groups.

Like the burkini ban, the elimination of foreign funds for mosques may be driven by a desire to be seen to be doing something, even if that something is ultimately counter-productive. A more successful strategy might be to build relationships with Muslim organisations, cooperate in identifying extremism and, as has already been happening in France, shutting down mosques where radical ideologies are being preached.

Photo credit: wstuppert via Foter.com / CC BY-NC-SA

 

Labour Should Commit to a Basic Income Pilot

This week it was revealed that the troubled families scheme, launched by David Cameron in 2012, has had “no discernible impact” on employment, truancy and adult and child offending. The scheme was initiated following the 2011 riots with the aim of “turning around” troubled families. However, an unpublished Whitehall report suggests that it has badly failed in its mission. The scheme has so far targeted 120,000 families around the country at a cost of £400 million, with a further £900 million due to be spent on another 400,000 families by 2020, meaning around £2500 will have been spent per family.

This money could instead have been spent on trialling basic income, and likely with better outcomes. The total cost of £1.3 billion would have easily funded a reasonably large-scale basic income pilot. For the same amount, 156,250 individuals could be given an unconditional weekly payment of £80 for two whole years. And if the pilot was designed to temporarily scrap job seekers allowance and perhaps reduce in-work benefits in the trial area, the pilot could even cost less than this or be widened in scale.

Shadow chancellor John McDonnell has already shown an interest in a universal basic income, and I believe a pilot is the sort of idea that the Labour Party should be looking at for the next general election, whenever is and whoever their leader may be. The party could use a pilot to test what impact a basic income would have on things like employment, mental and physical health, school performance, crime, entrepreneurship and private debt.

Some ardent supporters of basic income might say “oh but we’ve had successful pilots around the world already, let’s just get on with it and implement basic income for real”. However, it could be political suicide for the Labour Party to commit to a basic income before the public has had a real chance to acquaint themselves with the idea and be convinced. I would worry that the British public would reject basic income – just like the Swiss did in June – if they don’t have the opportunity to see it in action first. As Jeremy Corbyn has said, a basic income would be “a major, major change in social policy”. A pilot could provide us with further evidence that basic income really is the way forward and move us a step closer to its implementation.

So why not find a town or region with a higher than average unemployment rate in, say, the north of England, and try giving all working-age individuals a no-strings-attached £80 a week for a couple of years and see what happens? After all, it can’t go worse than the failed troubled families scheme.

How to Fund Basic Income in the UK Part 4: Sovereign Wealth Funds and Dividends

In a Reddit AMA session a couple of years ago, co-founder of the Basic Income Earth Network (BIEN) Professor Guy Standing stated that the “best way to fund a basic income is through establishment of sovereign capital funds”, otherwise known as sovereign wealth funds (SWF).

These funds are typically used by countries with great oil wealth in order to preserve some of this wealth for future generations when the oil eventually runs out. The funds are invested around the world to grow them over time. Norway’s SWF – currently worth around $847 billion (£647.6 bn) – is the largest in the world.

The SWF that people with an interest in basic income are most likely to be familiar with is the Alaskan Permanent Fund. Since 1977, the state of Alaska has been putting at least 25% of its oil revenue into the fund. The money is then invested, and the profits generated are distributed equally to every resident of Alaska in the form of an annual dividend. Last year’s dividend, at $2072, was the largest paid out so far.

The Alaskan dividend system has been a great success, enabling citizens to save and reduce their levels of debt, while helping the state to reduce inequality and poverty. Although it is obviously not a full basic income (i.e. enough to live on), it is the closest we have to an example of a basic income in the sense that it is a regular, unconditional payment made to all citizens.

Unfortunately, the UK squandered a great opportunity to set up a similar SWF in the 1980s using revenue from North Sea oil. Instead, as Stewart Lansley explains in an LSE blog post, “the proceeds were used to cut taxes and boost consumption – now widely recognised as a huge historic policy error”.

Writing in the Guardian, Guy Standing says that the UK must not make this mistake again by allowing a few elites to benefit from fracking rather than the many. Despite his opposition to fracking “for environmental and safety reasons”, he argues that “if fracking is to go ahead… then the people of this country should be the primary beneficiaries and decision-makers, not a plutocracy and a few multinational corporations.” Standing proposes the establishment of a “democratically governed national fracking fund”, created by renting areas of drilling to companies through public tender. The proceeds would then be “invested in ecological and socially desirable investments”, with dividends paid out in a similar way to the Alaskan Permanent Fund.

There are several other possible ways to create an SWF. One would be to reverse the trend of privatising publically-held assets. In the afore-mentioned blog post, Stewart Lansley outlines how and why this should be done:

In the last year alone, over £30bn of publicly owned assets from Eurostar to RBS have been sold. Next in line are to be the Land Registry and the remaining shares in Lloyds Bank previously bailed out with taxpayers’ money.

The government claims that such sales help pay down the deficit, but it makes little sense to use long term capital assets to finance a temporary revenue gap. Sales offer a one-off windfall – the family silver can’t be sold again. This will mean the permanent loss of collectively owned public assets, many highly profitable, built up over many decades, and the end of a stream of income delivered over time. In recent years, for example, the land registry has achieved annual surpluses of up to £100m, thus delivering regular dividends to the government…

Imagine the shape of the British economy today if, instead of the £200bn worth of successive sell-offs since the mid-1980s, public assets had then been pooled into a protected public ownership fund. With the revenue paid back into the fund – and only an agreed proportion of it spent – it would have grown to represent a significant part of the economy, providing a powerful balance to the entrenchment of private capital.

In a paper that would later be published as a chapter in his book “Exporting the Alaska Model: Adapting the Permanent Fund Dividend for Reform around the World (Exploring the Basic Income Guarantee)”, researcher Gary Flomehoft explores numerous revenue streams that could be used to establish SWFs or provide straight-up dividends. He shows that the Alaska model can be applied even in states and countries without vast reserves of oil, explaining that “SWFs can be based on other valuable resources such as copper (Chile), diamonds (Botswana), or even phosphates (Kiribati)”. Furthermore, he argues that even a resource-poor state like Vermont in the U.S. could harness its common assets to provide dividends of at least $1,972 to its citizens:

One might get the mistaken impression that only oil or resource-rich states can afford such a fund and dividend. Every state or country has substantial untapped revenue available because many natural resources and social common assets have been given away by government to private businesses. Businesses then sell them back to the public capturing not only the value they add with their effort, but also the scarcity value or economic rent of the assets given to them by public authorities.”

In his paper, Flomenhoft looks at various revenue streams such as land value and a carbon tax, licenses for logging, hunting and fishing, as well as fees for companies extracting groundwater and minerals or using publically funded resources such as the broadcast spectrum or the Internet (see also Peter Barnes’ excellent website dividendsforall.net). There’s no reason why these ideas couldn’t be looked into in the UK too.

Other options not explored in Flomenhoft’s paper include using Thomas Piketty’s idea of a wealth tax to establish an SWF, as suggested here by blogger Matt Bruenig, or Robert Reich’s proposal of sharing out profits from patents and trademarks.

In conclusion, we are certainly not short of common assets that can be rented out to the benefit of all citizens rather than a few individuals. By applying the Alaska model to the UK, we too could preserve the value of limited resources for future generations, while also reducing inequality and poverty today.

See also:

How to Fund Basic Income in the UK

How to Fund Basic Income in the UK Part 2: Land Value Tax

How to Fund Basic Income in the UK Part 3: Carbon Tax and Dividend

Photo credit: marianne muegenburg cothern via Foter.com / CC BY-SA